Triple Double Advisors

Triple Double Advisors
Contributor since:
Company: Triple Double Advisors LLC
The loss of coal business for the rails is not offset by more crude oil business. Coal a huge source of revenue for the rails.
The boom is already underway.
They are different commodities.
Hide the flow rate? How can you hide the flow rate when there was no meter on the well?
Natural-gas processing is a process whereby raw natural gas is processed by seperating various non-methane hydrocarbons and fluids to produce what is known as pipeline quality dry natural gas.
Natural-gas processing begins at the well head. The composition of the raw natural gas extracted from producing wells depends on the type, depth, and location of the reservior and the geology of the area. Oil and natural gas are often found together in the same reservoir. The natural gas produced from oil wells is generally classified as associated gas meaning that the natural gas is associated with or dissolved in crude oil. Natural gas production absent any association with crude oil is classified as dry nat gas.
Most natural-gas production contains, to varying degrees, methane gas and raw NGLs. Although they exist in a liquid state at underground pressures, these molecules will become gaseous at normal atmospheric pressure.
After being pipelined to an NGL plant (one of the largest is located at Mont Belview, Texas) the raw NGL is processed into propane, butane, ethane and pentane. This can be further processed in downstream plants or used as feedstock for chemicals manufacturing and for cooking and home heating.
You are close and you are thinking of condensate. Condensate sells at a premium to WTI. Condensate is a low-density, high-API gravity liquid hydrocarbon phase that generally occurs in association with natural gas. Its presence as a liquid phase depends on temperature and pressure conditions in the reservoir allowing condensation of liquid from vapor. The production of condensate reservoirs can be complicated because of the pressure sensitivity of some condensates: During production, there is a risk of the condensate changing from gas to liquid if the reservoir pressure drops below the dew point during production. Reservoir pressure can be maintained by fluid injection if gas production is preferable to liquid production. Gas produced in association with condensate is called wet gas. The API gravity of condensate is typically 50 degrees to 120 degrees. http://bit.ly/xmDMNe
Nat gas, in the short term, is headed to below $2.00/MMBtu, in my view.
PVA stock is not influenced by fracture completion methods.
Thank you.
Thanks. Our focus is on physical supply and demand.
Oil Macro
Oil has moved higher in early 2012 due to several factors. Continued concerns about Iran’s nuclear program have resulted in U.S. and European sanctions that have eliminated imports of Iranian crude by these countries. While countries such as China and India are not included in the sanctions, the hypothesis is that these remaining buyers will be in a position to extract price concessions from Iran due to a reduction in the number of buyers. The threat of possible military action against Iran has raised the risk that Iran’s exports of 2.6 Mil. Bbl/Day may be interrupted. Although Saudi Arabia has sought to assuage these fears by stating that they can increase current production by nearly 2.0 Mil. Bbl/Day within days if needed, the market is skeptical. When Libyan supplies went off-line last year because of civil conflict, it took Saudi Arabia approximately four months to raise production by just 0.8 Mil. Bbl/Day. Given that the country is now producing at 9.9 Mil. Bbl/Day, its highest rate since 2008, there are serious concerns about the ability to replace lost Iranian production.
The IEA currently estimates that OPEC has only 2.8 Mil. Bbl/Day of spare capacity available. OPEC spare capacity usually shrinks as a result of global economic expansion and increasing oil demand. In this case, however, OPEC spare capacity is low despite lackluster OECD economic growth in 2011.
Thus, we remain bullish on oil prices as fundamentals and geopolitical risks appear to be supportive of relatively high oil prices.
Oil Macro
Oil has moved higher in early 2012 due to several factors. Continued concerns about Iran’s nuclear program have resulted in U.S. and European sanctions that have eliminated imports of Iranian crude by these countries. While countries such as China and India are not included in the sanctions, the hypothesis is that these remaining buyers will be in a position to extract price concessions from Iran due to a reduction in the number of buyers. The threat of possible military action against Iran has raised the risk that Iran’s exports of 2.6 Mil. Bbl/Day may be interrupted. Although Saudi Arabia has sought to assuage these fears by stating that they can increase current production by nearly 2.0 Mil. Bbl/Day within days if needed, the market is skeptical. When Libyan supplies went off-line last year because of civil conflict, it took Saudi Arabia approximately four months to raise production by just 0.8 Mil. Bbl/Day. Given that the country is now producing at 9.9 Mil. Bbl/Day, its highest rate since 2008, there are serious concerns about the ability to replace lost Iranian production.
The IEA currently estimates that OPEC has only 2.8 Mil. Bbl/Day of spare capacity available. OPEC spare capacity usually shrinks as a result of global economic expansion and increasing oil demand. In this case, however, OPEC spare capacity is low despite lackluster OECD economic growth in 2011.
Thus, we remain cautiously bullish on oil prices as fundamentals and geopolitical risks appear to be supportive of relatively high oil prices.

Natural Gas Macro
Despite exploration and production companies rapidly shifting CapEx away from natural gas drilling, fundamentals for the commodity continue to show a significantly challenged environment in 2012. The latest storage data indicates that natural gas inventories are running well ahead of last year’s figures by +850 Bcf (+44.5%).
Despite prices stabilizing near the $2.50/MMBtu level in early February, there are only four weeks of the withdrawal season remaining and further production curtailments will be needed to prevent reaching operational storage capacity by late summer or early fall. Although shutting-in production may sound appealing for companies, in practice it is a complicated issue. First, shutting in recently completed shale wells risks damaging the wells and losing future production. It seems unlikely that companies will shut-in production from high production shale wells that they have recently been drilled at a cost of $5 - $7 Mil. Second, in order to shut-in a well, an operator will likely seek approval to do so from the other partners in the well. While this may not be technically required, working relationships and future partnerships may be jeopardized by the operator taking action unilaterally. Finally, the biggest source of natural gas growth in 2012 will likely be associated gas from wells producing a substantial mix of oil and natural gas liquids. Since the economics of these wells is driven by high priced oil and natural gas liquids, the associated dry gas will be produced despite current low prices.
Thus, while we remain optimistic about the possibility of continued strength in oil prices, we are cautious of trying to pick a bottom on natural gas in the near-term.
LNG is a clear, colourless, liquid that forms when natural gas is cooled to around -160ºC. This shrinks the volume of the gas 600 times, making it easier to store and transport.
NGLs, after being processed, include ethane, propane, butane, iso-butane, and natural gasoline. These NGLs are sold separately and have a variety of different uses; including raw materials for oil refineries or petrochemical plants, cooking fuel and space heating and agricultural uses. Unprocessed NGLs generally sell for about 1/2 of WTI crude oil.
Recent Trends in Oil and Gas Supply and Demand:
http://bit.ly/xO7Mym
I agree, PAA is a very well managed company.
KWK has too high a nat gas weighting, in our view.